4576.T

• Overall 2025 Full-Year Financial Results

  • Total revenue was 387 million yen (0.387 billion yen), a 17.8% decrease year-over-year, driven primarily by the end of Granatec royalty revenue. DW-1002 and Graalfa royalty revenue performed as expected.
  • R&D expenditure was 669 million yen (0.669 billion yen), a 51.0% decrease year-over-year, because 2024 included large costs for H-1337 US trials and DWR-2206 Japanese clinical development that did not recur in 2025.
  • Operating loss was 619 million yen (0.619 billion yen), which was a significant improvement compared to the prior year. Ordinary loss ended at 630 million yen (0.63 billion yen), and net loss was 632 million yen (0.632 billion yen).
  • Cash and cash equivalents increased significantly to 1.709 billion yen after 1.283 billion yen in capital raised via new share subscription rights in 2025, up from 1.126 billion yen at the end of 2024. Net assets increased 701 million yen (0.701 billion yen) year-over-year following the capital raise. Financing cash flow was positive 1.08 billion yen, while operating cash flow was negative 493 million yen (0.493 billion yen).

• Development Pipeline Progress

  • H-1337 (Glaucoma Treatment): Phase 2b trial was fully completed in 2025 following positive preliminary results released in 2024. Phase 3 preparation is ongoing, including investigational drug manufacturing, required non-clinical toxicity trials, and parallel licensing activities. A Type C meeting with the FDA was held in December 2025 to finalize the Phase 3 protocol, which includes two comparative trials and one long-term safety trial. The product targets outperforming US competitor Netarsudil, which has estimated annual sales of $100 million to $200 million.
  • H-1129 (Immune-based Keratoconjunctival Disease Treatment): Added as a new pipeline candidate in 2025. Development plans were finalized, and clinical trial preparation is ongoing. The candidate is planned to start at Phase 2, formulated as an eye drop, and the company plans to pursue orphan drug designation. Capital raised from the 13th new share subscription rights will fund development.
  • DW-5LBT (Bondlido, Neuropathic Pain Treatment): Approval was obtained in September 2025 after resubmission. Partner Medrex is currently negotiating with potential sales partners, targeting launch in the second half of the 2026 December fiscal year. Comparable product ZTlido has annual net sales of $52 million (approximately 8 billion yen), which serves as a market benchmark.
  • DWR-2206 (Regenerative Cell Product for Bullous Keratopathy): Phase 2 trial observation period completed in Japan in November 2025. No serious adverse events linked to the study product were observed, and results suggested improved visual acuity. The candidate has progressed to Phase 3, with protocol design and investigational product manufacturing ongoing. The company has already covered all its committed development costs, with no further development burden for Phase 3 and beyond. In China, licensee Acturize out-licensed the candidate to Arctic Vision China, but 2025 clinical trial initiation was not achieved, and the partner continues to target early initiation. The candidate has a competitive advantage as a frozen formulation, against marketed predecessor product Viznova.
  • K-321 (Ripasjil Indication Expansion for Fuchs Endothelial Corneal Dystrophy): Licensed out to Kowa, which is conducting two global Phase 3 trials. One trial has completed observation, while the second is still ongoing. All trials are expected to complete observation by March 2026. Kowa plans to submit for approval in 2027, targeting approval and launch in 2028, with initial launch planned in the US followed by European expansion. The company has no development cost burden and will receive royalty after launch. Published clinical research has shown high efficacy: 22 of 23 study eyes achieved corneal clearance after DSO surgery combined with ripasjil hydrochloride eye drops.
  • DW-1002 (BBG, Ophthalmic Surgery Adjuvant): In Japan, the company is continuing discussions with PMDA to resolve specification and quality issues required to leverage existing US approval data for domestic submission. In the US, partner DORC is conducting a small-scale trial requested by the FDA in preparation for combination product submission. 2025 targets for China approval/launch and Japanese submission were not achieved.

• Early Stage Research and Collaborative Development

  • Two new collaborative research projects were disclosed in the second half of 2025: a partnership with Chordia Therapeutics in July, and an exploratory dry eye research partnership with Daiichi Kogyo Seiyaku in October.
  • The company has focused on collaborative research for three years, with approximately 15 ongoing projects as of the end of December 2025. In ophthalmology, research covers anterior segment conditions (glaucoma, dry eye, cataract) and posterior segment conditions (retinal degeneration, gene therapy/neuroprotection, ocular inflammation). Outside of ophthalmology, the company is exploring kinase inhibitors for indications including schizophrenia, cancer, lifestyle-related diseases, and ED treatment.

• 2026 December Fiscal Year Full-Year Guidance

  • Total revenue is guided at 300 million yen (0.3 billion yen), which is a decrease compared to 2025 actual revenue. The decrease is primarily driven by the expiration of DW-1002 patents outside the US, which will eliminate non-US royalty revenue from this segment.
  • Ordinary loss is guided at 800 million yen (0.8 billion yen), and R&D expenditure is guided at 780 million yen (0.78 billion yen), a moderate increase compared to 2025 actual R&D spending. The increased R&D spend will fund development of H-1337 and H-1129, plus research investment in new development candidates.

• 2026 Planned Key Milestones

  • Finalize a sales partner and launch DW-5LBT, with launch targeted for the second half of the 2026 fiscal year.
  • Continue targeting initiation of DWR-2206 clinical trials in China, after the 2025 target was missed.
  • Target completion of the observation period for the second global Phase 3 trial for K-321.
  • Target submission of the DW-1002 combination product application in the US and the single agent application in Japan.

• Long-Term Pipeline and Business Guidance

  • The company maintains a strategic plan to launch one product per year: DW-5LBT in 2026, DW-1002 in Japan and the US in 2027, and K-321 in 2028.
  • The company targets building aggregate annual royalty revenue to a 1 billion yen scale over the long term, as newly launched products contribute revenue.
  • The company has a stated target of reaching 10 billion yen in market capitalization, to meet revised Tokyo Stock Exchange Growth Market listing standards. As of the end of 2025, market capitalization was 5.2 billion yen, well below target. The company will pursue this goal through accelerating business progress, advancing the pipeline, and exploring business and capital alliances.
  • The company will continue to pursue necessary capital raising to fund its robust pipeline investment needs, while prioritizing and selecting opportunities to manage development risk. The company intends to maintain a cycle of generating revenue from out-licensed products, raising additional capital from capital markets, investing in internal development and new candidate discovery, and driving revenue growth via product launches to increase both business performance and market capitalization.

The company's revenue is split between two core marketed product segments:

1. Ripasjil (Granatec/Graalfa): Total royalty revenue from this segment is on a declining trend overall, driven by the end of Granatec royalty in September 2024. Graalfa royalty has increased following its approval, but not enough to offset the loss of Granatec royalty. This segment contributed a portion of the full-year 387 million yen (0.387 billion yen) total revenue, with a net decline year-over-year.
2. BBG (DW-1002): This segment has seen growing revenue in recent years due to the impact of yen depreciation and the mid-period start of US sales. It contributed the remaining portion of 2025 full-year total revenue, with positive growth year-over-year. After 2026, non-US patents for DW-1002 will expire, eliminating all non-US royalty revenue from this segment.

• Multiple key 2025 initial targets were not achieved: DWR-2206 clinical trial initiation in China, completion of both K-321 global Phase 3 trials, DW-1002 approval and launch in China, and DW-1002 submission in Japan.
  • Non-US patents for BBG (DW-1002) will expire in 2026, eliminating all non-US royalty revenue from this marketed product and driving an expected decline in total revenue in 2026 and 2027.
  • Licensing activities for H-1337 saw no progress in 2025, and licensing outcomes are dependent on third-party interest, with no guarantee of a successful deal.
  • Clinical development success is not guaranteed: all pipeline candidates face inherent risk of failure to meet efficacy or safety endpoints, or delays in regulatory approval.
  • The company requires continued large capital investment to fund its pipeline, and there is risk that sufficient capital may not be available on acceptable terms when needed. The company also faces risk that not all development investments will deliver successful commercial products, as is inherent to biopharmaceutical development.
  • The company's current market capitalization is significantly below the 10 billion yen target required to meet revised Tokyo Stock Exchange Growth Market listing standards, creating listing compliance risk.

The full Q&A content for this earnings call is hosted externally at the following link: https://pdf.irpocket.com/C4576/doF3/KiXl/Q7OU.pdf. No Q&A exchanges are included in the provided transcript content.